The big question after the May FOMC statement was "how symmetric is The Fed's reaction function" to inflationary upside, i.e. how much will the Fed allow inflation to overshoot, and how much attention are they really paying to the collapsing yield curve? And as Bloomberg noted, a key focal point of the minutes will be to further distinguish the main thresholds separating the three- and four-hike camps in the 2018 dot plot.

Former fund manager Richard Breslow wrote in his Trader's Notes column earlier:

"I expect there is a decent chance that the FOMC minutes we’re going to see this afternoon read on the hawkish side. What a difference a few weeks make. Way back then Fed-speak was clearly trending to the upbeat side and they were getting even more hopeful on the inflation side of the dual-mandate."

But it appears The Fed walked the tightrope on "symmetry" by showing a hawkish tilt:

• *MOST FED OFFICIALS SAW NEXT RATE HIKE LIKELY APPROPRIATE `SOON' - So June is a lock!
• *SOME OFFICIALS SAW FORWARD-GUIDANCE REVISION APPROPRIATE SOON

Mixed with some dovishness.

• *FED MINUTES NOTE MODEST INFLATION OVERSHOOT `COULD BE HELPFUL'

In other words, a schizophrenic Fed which will "hike soon", but is willing to let inflation overshoot.

Here is the money quote for the hawks:

"Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the Committee to take another step in removing policy accommodation''

And for the doves:

It was also noted that a temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective.

In other words - we'll keep hiking slow and steady, while CPI hits 3% or more, until something breaks.

*  *  *

Below are selected excerpts from the FOMC meeting minutes that concluded on May 2 (via Bloomberg):

On the coming rate hike and removing accommodation:

"Most participants judged that if incoming information broadly confirmed their current economic outlook, it would likely soon be appropriate for the Committee to take another step in removing policy accommodation."

"Overall, participants agreed that the current stance of monetary policy remained accommodative, supporting strong labor market conditions and a return to 2 percent inflation on a sustained basis."

... BUT here is why CPI will overshoot 2% and may hit 3% or more:

"A few participants commented that recent news on inflation, against a background of continued prospects for a solid pace of economic growth, supported the view that inflation on a 12-month basis would likely move slightly above the Committee’s 2 percent objective...